Q1 2025 RxSight Inc Earnings Call - Preliminary
Operator: Thank you for standing by, and welcome to the Rxsight conference call. All lines have been placed on mute to prevent any background noise.
Thank you for standing by and welcome to the Rx side Conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you.
Speaker Change: If you would like to withdraw your question Press Star one again. Thank you I would now like to turn the call over to Oliver Marsh Dovish VP of Investor Relations. Please go ahead.
Oliver Moravcevic: I would now like to turn the call over to Oliver Moravcevic, VP of Investor Relations. Please go ahead. Thank you, Operator.
Speaker Change: Thank you operator, presenting today are excited president and Chief Executive Officer, Dr. Curt and Chief Financial Officer, Shelley Thunen yesterday evening are excited released preliminary revenue results for the three months ending March 31, 2025, and revised full year guidance a copy of the <unk>.
Ron Kurtz: Presenting today are Rxsight President and Chief Executive Officer, Dr. Ron Kurtz, and Chief Financial Officer, Shelley Thunen.
Ron Kurtz: Yesterday evening, Rxsight released preliminary revenue results for the three months ending March 31st, 2025, and revised full-year guidance. A copy of the press release is available on the company's website.
Speaker Change: Press release is available on the company's website.
Ron Kurtz: Before we begin, I would like to inform you that comments and responses to questions during today's call reflect management's views as of today, April 3rd, 2025, and will include forward-looking and opinion statements including predictions, estimates, plans, expectations, and other information. Actual results may differ materially from those expressed through XRIST as a result of certain risks and uncertainties. These risks and uncertainties are more fully described in our press release issued yesterday and in our filings with the Securities and Exchange Commission or SEC. Our SEC filings can be found on our website or the SEC's website.
Speaker Change: Before we begin I would like to inform you that comments and responses to questions. During today's call reflect management's views as of today April 32025, and will include forward looking an opinion statements include predictions estimates plans expectations and other information.
Speaker Change: <unk> results may differ materially from those expressed.
Speaker Change: As a result of certain risks and uncertainties. These.
Speaker Change: These risks and uncertainties are more fully described in our press release issued yesterday and in our filings with the Securities and Exchange Commission or S. E C.
Speaker Change: Our SEC filings can be found on our website or the Sec's website.
Ron Kurtz: Investors are cautioned not to place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise these forward-looking statements, except as may be required by law.
Speaker Change: Investors are cautioned not to place undue reliance on forward looking statements and we disclaim any obligation to update or revise these forward looking statements except as may be required by law. During today's call. We will also discuss certain non-GAAP financial measures.
Ron Kurtz: During today's call, we will also discuss certain non-GAAP financial measures.
Ron Kurtz: I would also like to remind you that the preliminary results discussed on the call today are estimates, and there are complete, unaudited financial results for the first quarter of 2025, which are subject to the review of our independent auditor, are expected to be announced on Wednesday, May 7, 2025. Please note that this conference call will be available for audio replay on our Investor Relations website.
Speaker Change: I would also like to remind you that the preliminary results of this kind of discussed on the call. Today are estimates and there are complete unaudited financial results for the first quarter of 2025, which are subject to the review of our independent auditor are expected to be announced.
Speaker Change: Wednesday may seven 2025.
Speaker Change: Please note that this conference call will be available for audio replay on our Investor Relations website with that I will turn the call over to our President and Chief Executive Officer, Dr. Ron Kirk right.
Ron Kurtz: With that, I will turn the call over to our President and Chief Executive Officer, Dr. Ron Kurtz. Ron? Good morning, and thank you for joining us. I want to first recognize the entire Rxsight team, as well as our partners in clinical practice, for all of their efforts to provide high-quality, customized vision to patients undergoing cataracts. During today's call, we will be offering additional color on the factors that affected Q1 revenue and have led us to revise our 2025 guidance. We will also outline additional actions we are taking to reinvigorate our growth trajectory. Our preliminary analysis indicates that the top line miss in Q1 was due to several factors, including a weakened premium IOL market and unusual sequential launches of new premium IOLs that have extended from mid-2024 and into Q1 of 2025.
Speaker Change: Good morning, and thank you for joining us I want to first recognize the entire Rx side team as well as our partners in clinical practice for all of their efforts to provide high quality customized vision to patients undergoing cataract surgery.
Speaker Change: During today's call, we will be offering additional color on the factors that affected Q1 revenue and have led us to revise our 2025 guidance we.
Speaker Change: He will also outline additional actions, we are taking to reinvigorate our growth trajectory.
Speaker Change: Our preliminary analysis indicates that the topline Miss in Q1 was due to several factors, including a weakened PMI premium I O L market and unusual sequential launches of new premium mile Wells that have extended from mid 2024 and into Q1 of 2025.
Ron Kurtz: These factors subsequently combined with abrupt changes in consumer sentiment that occurred later in Q1, resulting in our first year-over-year drop in same-store LAL sales, most commonly measured as LALs per LDD per month. During most of 2024, this metric saw strong year-over-year increases, which, along with new LDD placements, resulted in high year-over-year procedural growth rates. Since nearly half of LAL procedures come from patients who would have otherwise received a standard monofocal IOL, when volume from the LAL is excluded, the remaining premium IOL market would have likely seen declines beginning in mid-2024. Due to the older demographic and medical necessity associated with cataracts, premium IOL surgery has historically been less sensitive to macroeconomic trends.
Speaker Change: These factors subsequently combined with abrupt changes in consumer sentiment that occurred later in Q1, resulting in our first year over year drop in same store L. L sales, most commonly measured as LLS per L. D D per months.
Speaker Change: During most of 2024 this metric saw strong year over year increases, which along with new L. D. D placements resulted in high year over year procedural growth rates.
Speaker Change: Since nearly half a L. L procedures come from patients who would have otherwise received a standard mono focal ire well when volume from the L. A L is excluded the remaining premium IOL market would have likely seen declines beginning in mid 2024.
Speaker Change: Due to the older demographic and medical necessity associated with cataracts premium I O L surgery has historically been less sensitive to macroeconomic trends.
Ron Kurtz: This is in contrast to other patient paid procedures like LASIK that target younger individuals who can usually delay procedures indefinitely by continuing to wear their glasses or contact lenses. However, a softening of the overall premium IOL market in the second half of 2024 would be consistent with reports of a much more markedly depressed U.S. LASIK market during this period. While LALs per LDD per month also decelerated in Q4 2024, they remained near their earlier highs, leading us to underappreciate the likely downward trend in the overall premium market. This phenomenon likely also led us to underestimate the impact from sequential market launches of new premium IOLs by two major competitors in Q3 and Q4 of 2024.
Speaker Change: This is in contrast to other patient pay procedures like lasik that target younger individuals who can usually delay procedures indefinitely by continuing to wear glasses or contact lenses.
Speaker Change: However, a softening of the overall premium eyewear market in the second half of 'twenty 'twenty four would be consistent with reports of a much more markedly depressed U S. Lasik market during this period.
Speaker Change: While early else per L. D. D per month also decelerated in Q4 2024, they remain near their earlier highs, leading us to underappreciated the likely downward trend in the overall premium market.
Speaker Change: This phenomenon likely also led us to underestimate the impact from sequential market launches of new premium wells by two major competitors in Q3 and Q4 of 2024.
Ron Kurtz: Historically, presbyopia-correcting IOL market share dynamics have been temporarily disrupted by incentives to surgeons trialing newly-launched lens While typically transitory, the sequential product cycles continue to be a market distraction in Q1. which when coupled with a soft overall premium market likely provided less reserve for additional disruption. Although small sequential declines in LALs per LDD per month were observed from Q4 to Q1 in both 2023 and 2024, we saw a much more pronounced decline from Q4 2024 to Q1 of 2025. While procedure volumes were consistent with our recent history in early and mid Q1, lower procedure volumes extended through the month of March, when they have historically ramped up.
Speaker Change: Historically presbyopia correcting I O L market share dynamics have been temporarily disrupted by incentives to surgeons trialing, new newly launched lenses.
Speaker Change: While typically transitory the the sequential product cycles continued to be a market distraction in Q1.
Speaker Change: Which when coupled with a soft overall premium market likely provided less reserve for additional disruptions.
Speaker Change: Although small sequential declines in L. A LS per L. D. D per month were absorbed observed from Q4 to Q1 in both 2023 and 'twenty 'twenty four we saw a much more pronounced decline from Q4 2024 to Q1 of 2025.
Speaker Change: While procedure volumes were consistent with our recent history in early in mid Q1, lower procedure volumes extended through the month of March when they have historically ramped up.
Ron Kurtz: Given the widely reported and rapid changes in the macro environment, including significant declines in the S&P and NASDAQ during the latter part of the quarter, we believe that negative wealth effects may have impacted premium IOL procedure decision-making, leading to potential trade-downs to lower-priced or non-premium alternatives. Though we believe these factors are also likely transitory, when coupled with a third sequential product cycle from our largest competitor, they justify a swift and strong response on our part. This starts with leveraging our dedicated commercial and clinical teams to execute refined clinical education and practice adoption programs for both existing and new customers.
Speaker Change: Given the widely reported and rapid changes in the macro environment, including significant declines in the S&P and NASDAQ during the latter part of the quarter. We believe that negative wealth effects may have impacted premium IOL procedure decision, making leading to potential trade downs to lower priced or non premium.
Speaker Change: Alternatives.
Speaker Change: Though we believe these factors are also likely transitory when coupled with a third sequential product cycle from our largest competitor they justify a swift and strong response on our part.
Speaker Change: This starts with leveraging our dedicated commercial and clinical teams to execute refined clinical education and practice adoption programs for both existing and new customers focusing on those that have experienced procedural declines or slower growth in the first quarter of 2025.
Ron Kurtz: focusing on those that have experienced procedural declines or slower growth in the first quarter of 2025. We have also accumulated extensive clinical data and experience with both the LAL and LAL+, that we believe will help doctors better counsel patients on the durable benefits of high quality customized vision that is uniquely enabled by Rxsight's adjustable IOL platform. As an example, our recently completed post-approval study demonstrated that compared to eyes receiving a monofocal IOL, eyes with an LAL were 14 times more likely to have what is considered to be an outstanding refractive outcome. Further, our continued rollout of product enhancements provides our teams additional opportunities for meaningful interactions with our doctors and clinical practices to convey their important clinical and efficiency benefits.
Speaker Change: We have also accumulated extensive clinical data and experience with both the L. A L. L. L plus that we believe will help doctors better counsel patients on the durable benefits of high quality customized vision that is uniquely enabled by our excites adjustable I O L platform.
Speaker Change: As an example, our recently completed post approval study demonstrated that compared to eyes, receiving a mono focal I O. L is within lay out where 14 times more likely to have what is considered to be an outstanding refractive outcome.
Speaker Change: Further our continued rollout of product enhancements provides our teams additional opportunities for meaningful interactions with our doctors and clinical practices to convey their important clinical and efficiency benefits.
Ron Kurtz: In addition to these efforts with our traditional customers, we also intend to strongly support the acceleration in new customer business models, including those that offer doctors and patients centralized third-party light treatment options that may further lower the threshold to adopt our technology. Though our focus remains on expanding adoption within the U.S. market, we are also pleased to report European regulatory approval for our LDD and LAL. While we are excited about the long-term commercial opportunity in the EU, our priority in 2025 will be to build a base of European clinical expertise and practice experience, while we also push ahead with approval of LAL+.
Speaker Change: In addition to these efforts with our traditional customers. We also intend to strongly support the acceleration in new customer business models, including those that offer doctors and patients centralized third party late treatment options that may further lowered the threshold to adopt our technology.
Speaker Change: Though our focus remains on expanding adoption within the U S. Market. We are also pleased to report European regulatory approval for our L. D D and lay out.
Speaker Change: While we are excited about the long term commercial opportunity in the EU our priority in 2025 will be to build a base of European clinical expertise and practice experience. While we also push ahead with approval of L. L plus.
Ron Kurtz: We are simultaneously pursuing our regulatory approvals in Asia while gaining early clinical experience in Japan, Hong Kong, and South Korea.
Speaker Change: We are simultaneously pursuing a regulatory approvals in Asia, while gaining early clinical experience in Japan, Hong Kong and South Korea.
Ron Kurtz: While we remain highly confident in our long-term opportunity to reshape the premium Iowa market, we also acknowledge the need to reset our 2025 guidance due to the time that may be required for these efforts to have meaningful impact and for the headwinds discussed earlier to subside.
Speaker Change: While we remain highly confident in our long term opportunity to reshape the premium IOL market. We also acknowledged the need to reset our 2025 gate guidance due to the time that may be required for these efforts to have meaningful impact and for the headwinds discussed earlier to subside.
Shelley Thunen: For more on these changes, I'll now turn the call over to Shelley. Thank you, Ron. I will briefly review the preliminary first quarter revenue results and updated guidance for the remainder of 2025 that were included in our pre-announcement presentation. Consistent with the press release, our preliminary first quarter 2025 revenue was $37.9 million, up 28% compared to the year-ago quarter, and down sequentially 6% from our fourth quarter 2024 revenue. During the first quarter, we sold 73 LDDs, up 11% from the year-ago period, and down 12% from the fourth quarter of 2024. We ended the first quarter with an LDD install base of 1044 units, up 43% compared to the end of the first quarter of 2024, and 8% compared to the end of the fourth quarter of 2024.
Shelly: For more on these changes I'll now turn the call over to Shelly.
Shelly: Thank you Ron.
Shelly: I will briefly review the preliminary first quarter revenue results and updated guidance for the remainder of 2025 that were included in our pre announcement press release.
Shelly: Consistent with the press release are preliminary first quarter 'twenty to 'twenty five revenue was $37 $9 million up 28% compared to the year ago quarter and down sequentially, 6% from our fourth quarter 2020 for revenue.
Shelly: During the first quarter, we sold 73 L D DS.
Shelly: 11% from the year ago period, and down 12% from the fourth quarter of 2024, we ended the first quarter with an L. D. D installed base of 1044 units up 43% compared to the end of the first quarter of 'twenty, 'twenty, four and 8% compared to the.
Shelly: We ended the fourth quarter of 2024.
Shelley Thunen: We also sold 27,579 LALs in the period, up 36% from the first quarter of 2024 and sequentially down 5% from the seasonally stronger fourth quarter of 2024.
Shelly: We also sold 27579 L. A LS in the period up 36% from the first quarter of 'twenty, 'twenty, four and sequentially down 5% from the seasonally stronger fourth quarter of 2024.
Shelley Thunen: While we will provide a full financial report on May 7, based on the preliminary revenue results and informed by the multiple dynamics just discussed by Ryan, we are revising the guidance we provided in January as follows. We are reducing revenue guidance from $185 million to $197 million, to $160 million, to $175 million, thereby reducing implied growth compared to 2024 from the previous 32% to 41% range, to 14% to 25%. We continue to believe that we will sell more LDDs in 2025 than in 2024, with economic headwinds likely having a greater impact on LAL procedures that are more directly tied to consumer decisions.
Shelly: Well, we will provide a full financial report on May seven based on the preliminary revenue result, and informed by the multiple dynamics just discuss Fireeye. We are revising the guidance. We provided in January as follows we are reducing revenue guidance from 185 million 200.
Shelly: $97 million.
Shelly: 60 million to $175 million, there by reducing imply growth compared to 2024 from the previous 32% to 41% range to 14% to 25%. We continue to believe that we will sell more L. D D in 2025.
Shelly: Then in 'twenty 'twenty four.
Shelly: Economic headwinds likely having a greater impact on L. A L procedures that are more directly tied to consumer decision, making in contrast, as demonstrated by relatively stable L. D. E sales in Q1 touchy some practices continue to invest in private pay procedures.
Shelley Thunen: In contrast, as demonstrated by the relatively stable LDD sales in Q1, doctors and practices continue to invest in private pay procedures that deliver better outcomes for their patients and counteract ongoing reimbursement cuts and drop some more economically impacted private pay procedures, such as layoffs. Our gross margin guidance is unchanged at 71 to 73%. representing an applied increase of 30 basis points to 130 basis points compared to 2020. We also remain committed to aligning operating expenses with the pace of revenue growth with a significant reduction in operating expense from the previous guidance of $165 million to $170 million to $150 million to $160 million, representing a change in the implied increase compared to 2024 from 22% to 25% to 10% to 18%.
Shelly: To lever better outcomes for their patients and counteract ongoing reimbursement cuts and drops them more economically impacted private pay procedures such as lately.
Shelly: Gross margin guidance is unchanged at 71% to 73% representing an implied increase of 30 basis points. She wanted it and 30 basis points compared to 2024.
Shelly: We also remain committed to aligning operating expenses with the pace of revenue growth with a significant reduction in operating expense from the previous guidance of 165 million to 170 million to 150 million $260 million representing a change.
Shelly: And the implied increase compared to 2024 from 22% to 25% to 10% to 18%.
Shelley Thunen: Our revised operating guidance of $150 million to $160 million is higher as a percentage of revenue and gross margin than our previous guidance in January, taking into account the anticipated increase in one-on-one interactions with customers. Included in our costs, primarily in operating expense, is non-cash stock-based compensation expense, which we now project to increase from the previous $22 million to $25 million. $27 million to $30 million. This revision reflects higher-than-anticipated option grants issued in March 2025 to existing employees for performance, adjustment to market comps, and retention compared to our original guidance provided in early January 2025.
Shelly: Our revised operating guidance of 150 million 260 million is higher as a percentage of revenue and gross margin than our previous guidance in January taking into account the anticipated increase in one on one interactions with customers.
Shelly: Included in our cost primarily in operating expense is noncash stock based compensation expense, which we now protect an increase from the previous $22 million $25 million to $27 million $30 million.
Shelly: This revision reflects higher than anticipated option grants issued in March 2025 to existing employees for performance adjustment to market comps and retention compared to our original guidance provided in early January 2025, and with that I'll turn the call back to you.
Shelley Thunen: And with that, I'll turn the call back over.
Shelly: Right.
Ron Kurtz: Thank you, Shelley. With customer satisfaction at an all-time high of 97 percent, we believe that Rxsight's adjustable technology will continue to reshape the premium cataract surgery market by offering the only IOL that allows patients to customize their vision after surgery. By delivering exceptional clinical outcomes in one of the most important markets in ophthalmology, we believe Rxsight remains central to the growth story for both ophthalmic practices and the overall IOL industry. While our large customer base now exposes us more to market-wide dynamics, we believe it also provides us with the opportunity to leverage our platforms for sustained growth through targeted educational efforts and innovative product enhancements.
Speaker Change: Thank you Shelley with customer satisfaction, and an all time high of 97%, we believe that our excites adjustable technology will continue to reshape the premium cataract surgery market by offering the only I O L that allows patients to customize their vision after surgery.
Speaker Change: By delivering exceptional clinical outcomes and one of the most important markets in ophthalmology, we believe our excite remain central to the growth story for both ophthalmic practices and the overall I O L industry.
Speaker Change: While our large customer base now exposes us more to market wide dynamics. We believe it also provides us with the opportunity to leverage our platform for sustained growth through targeted educational efforts and innovative product enhancements.
Ron Kurtz: In addition, we believe new clinical delivery channels offer alternative opportunities for growth in the U.S. while we continue to make progress towards commercialization in key markets outside of North America.
Speaker Change: In addition, we believe new clinical delivery channels offer alternative opportunities for growth in the U S. While we continue to make progress towards commercialization in key markets outside of North America.
Operator: And with that, I'll ask our operator to open the call for questions. Thank you. We will now begin the question and answer session.
Speaker Change: And with that I'll ask our operator to open the call for questions.
Kim: Kim we will now begin the question and answer session. If you are called upon to ask a question in our listening via loud speaker in your device. Please pickup your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Ryan Zimmerman with <unk>. Please go ahead. Your line is.
Operator: If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Ryan Zimmerman: Your first question comes from the line of Ryan Zimmerman with VTIG. Please go ahead, your line is open. Okay, and thanks for taking our questions. Morning, Ryan. Morning.
Speaker Change: Okay.
Speaker Change: Okay, and thanks for taking our questions.
Speaker Change: Okay.
Speaker Change: Good morning, Ryan.
Shelley Thunen: So let's start with the guidance, if we could. I appreciate your comments, Shelley, on guidance, but if if we could talk a little bit about kind of the subcomponents or the underlying assumptions on on guidance, particularly as it relates to productivity, you know, you expect LDDs to grow, but, you know, maybe you could elaborate a little bit further on kind of how you're thinking about productivity of LALs per LDD going forward. Given the dynamics you laid out. Yeah, thank you very much, Ryan. You know, I think the biggest driver, obviously, other than Q1 performance to our guidance is the fact that the typical significant increase that we see in March in terms of number of LAL procedures since we've been commercial did not happen, and it was relatively flat to January and February.
Speaker Change: So let's start with guidance if we could I appreciate your comments on guidance, but if.
Speaker Change: If we could talk a little bit about kind of the sub components are the underlying assumptions on guidance.
Speaker Change: Particularly as it relates to productivity.
Speaker Change: You know you expect Leds to grow, but maybe you could elaborate a little bit further and kind of how youre thinking about productivity of LLS per L. D D.
Speaker Change: Going forward.
Given the dynamics you laid out.
Speaker Change: Yeah. Thank you very much Ryan.
Speaker Change: Thank the biggest driver obviously other than Q1 performance to our guidance is the fact that the typical significant increase at week T. In March in terms of number of L. L procedures since we'd think commercial did not happen and it was relative.
Speaker Change: <unk> flat to January and February.
Shelley Thunen: So I think our guidance really reflects the change in the number of LALs we expect to sell, and offset in part by strong LDDs that we expect to be higher than 2024. In terms of the number of LALs per LDD, we certainly model that those increase over the year. And typically, what you see is kind of sequential growth up in Q2, down in Q3, up in Q4. I'm a little reluctant to say that the typical seasonality will. be in place this year until we get through the second quarter and just see what the economic impacts are to the economy and how customers are, you know, selling to their clients and what we hear back from, you know, our ophthalmic customers about the response of patients to a premium IOL procedure versus sticking with a monofilament.
Speaker Change: So I think our guidance really reflects the change in the number of L. L. We expect Q T cell.
You know and offset in part by strong L. D geese that we expect to be higher than 2024.
Speaker Change: In terms of the number of LLS per L. D. D. We certainly model that those increase over the year and typically you know what you see is kind of you know.
Speaker Change: Sequential growth up in Q2 down in Q3 up in Q4, I'm, a little reluctant to say that the typical seasonality will.
Speaker Change: The in place this year until we get through the second quarter and just see what the economic impacts are.
Speaker Change: To the economy and how customers are you know selling to their clients and what we hear back from you know our ophthalmic customers.
The.
Speaker Change: Responsive.
Speaker Change: Patients too.
Speaker Change:
Speaker Change: Our premium I O L procedure versus sticking with the mono focal.
Shelley Thunen: But Shelley, just to be clear, I mean, the math would suggest declines on productivity through the year. And I just want to be clear, is that your assumption given the increase in LDDs? I think that other than absent perhaps the fourth quarter, that's going to be true on a much larger LDD base relative to the number of LALs, but I'm not exactly predicting that. I think second quarter is probably the biggest risk quarter until we understand what is happening with the economy and how it's affecting our customers and whether in fact that's prolonged.
Shelley Thunen: Shelley just to be clear I mean.
Shelley Thunen: The math would suggest declines on productivity through the year and I just wanted to be clear is that your assumption.
Shelley Thunen: Given the increase in L. D D.
Shelley Thunen: I think that.
Shelley Thunen: Other than absent, perhaps the fourth quarter.
Shelley Thunen: That can be true on a much small you know larger L. D D base relative to the number of L. A LS and but I'm not exactly predicting that I think second quarter is it's probably the biggest risk quarter until we understand what is happening with the economy and how it's affecting our customers.
Shelley Thunen: And whether in fact, that's prolonged.
Ryan Zimmerman: Okay, and then the second question is, is just, and this is, this is arguably an impossible question, but I'm going to ask it anyway, Ron, which is, as you think about the components of what led to the, the, the, the myth. You kind of broke down some of it, meaning there was a weakened premium IOL market. There was, you know, new product launches. You also alluded to, you know, just broader macroeconomic dynamics. And in the press release, you know, I think some of your customers are newer and maybe taking longer to ramp. And so I don't know if you can parse this out, Ron.
Shelley Thunen: Okay and then.
Shelley Thunen: The second question is just and this is this is arguably an impossible question, but I'm going to ask it anyway, Ron which is as you think about the components of what led to the.
Shelley Thunen: The mess.
Shelley Thunen: You kind of broke down some of it meaning there was a weakened premium market. There was new product launches you also alluded to just broader macroeconomic dynamics.
Shelley Thunen: And in the press release I think some of your customers are newer and maybe taking longer to ramp and so I don't know if you can parse this out Ron.
Ron Kurtz: But there's a lot of things kind of, you know, thrown in there.
Shelley Thunen: But there is a lot of things kind of thrown in there.
Ron Kurtz: And I don't, you know, if you can prioritize kind of where you think the biggest drivers are. In terms of the impact, what's transient, what's not transient, or maybe out of your control, such as the macroeconomic conditions, I think that would be helpful for everyone to understand. Yeah, I would say that as you described, there's been a confluence of factors that you know, happened in Q1, particularly in the latter part of Q1. And, you know, I think that all of them are transitory to some extent. The, you know, those, you know, product launches are something that are planned years in advance.
Shelley Thunen: And.
Shelley Thunen: If you can prioritize kind of where you think the biggest drivers are.
Shelley Thunen: In terms of the impact what's trends and what's not transient or maybe out of your control such as the macroeconomic conditions I think that would be helpful for everyone to understand.
Shelley Thunen: Yeah, I would say that as you described there's been a confluence of.
Shelley Thunen: Factors that.
Shelley Thunen: You know happened in Q1, particularly in the latter part of Q1.
Shelley Thunen: And I.
Shelley Thunen: I think that all.
Shelley Thunen: All of them are transitory to.
Shelley Thunen: To some extent.
Shelley Thunen:
Shelley Thunen: The.
Shelley Thunen: Those product launches are something that are planned years in advance.
Ron Kurtz: It's, you know, unusual to have two, let alone three, sequential launches in the space, in a relatively short space, and, you know, while we're not directly, you know, we're not directly by those, they do cause a distraction in the marketplace. as doctors are incentivized to trial new lenses.
Shelley Thunen: It's unusual to have.
Shelley Thunen: To let alone three sequential launches in the space in a relatively short space.
Shelley Thunen: And while.
Shelley Thunen: While we are not directly.
Shelley Thunen: Yes.
Speaker Change: Affected by those they do cause a distraction in the marketplace.
Speaker Change: As as.
Speaker Change: As doctors are incentivized to trial new lenses.
Ron Kurtz: I think the obvious thing that changed in Q1 was the macro environment. And it's a, you know, that's a more complicated question. I certainly am hopeful that those, that that will also improve. But you know, as we've seen from the events even from yesterday, you know, there's going to be some additional changes.
Speaker Change: I think so the the obvious thing that changed.
In Q1 was the macro environment.
Speaker Change: And I, it's a you.
Speaker Change: That's a a more complicated question.
Speaker Change: I certainly am hopeful that those that that will also.
Improve.
Speaker Change: But you know as we as we've seen.
Speaker Change: From the events even from last yesterday.
Speaker Change: You know, there's there's going to be some additional changes.
Operator: Thank you.
Speaker Change: Thank you.
Xuyang Li: Your next question comes from the line of Xuyang Li with Jeffreys. Please go ahead, your line is open. All right, thanks for taking our questions. The first one, I'm just wondering regarding utilization by cohort, you know, when we do some checks, obviously some surgeons can do a lot more than average. Wanted to get a better understanding, you know, if you look at the cohorts from, you know, earlier years, 21, 22, you know, how... does their utilization rate compare versus the average?
Young Li: Our next question comes from the line of young Li with Jefferies. Please go ahead. Your line is open.
Speaker Change: Alright, thanks for taking our question.
Speaker Change: The first one.
Speaker Change: Wondering regarding your.
Speaker Change: Realisation by cohort.
Speaker Change: When we do some checks obviously some surgeons can do a lot more than average.
Speaker Change: Wanted to get a better understanding.
Speaker Change: If you look at the cohort from earlier years 'twenty, one 'twenty two.
Speaker Change: You know how.
Speaker Change: Does their utilization rate.
Speaker Change: Compare versus the average.
Xuyang Li: you know, where do you see sort of like a natural ceiling or pain point before, you know, some of the practice management things you're going to put into place can help them further become more...
Speaker Change: You know, where do you see sort of like a natural ceiling or pain point.
Speaker Change: Before some of the practice management things youre going to put into place.
Speaker Change: <unk> can help them further become more efficient.
Ron Kurtz: Thank you for the question, Xuyang. You know, we have always spoken about the fact that the cohorts of installed LDDs in 21 and prior, 22 and 23, have been relatively the same, and that they kind of move in concert, and we saw that again in the first quarter. So, where the number of LALs per LDD went down, it went down in all cohorts, and they're very tight in their distribution, and that continued to be true. Also, as we look across our territories in the U.S., the change and the effect in March were consistent throughout the U.S.
Young Li: Thank you for the question young.
Young Li: You know we have always spoken about the fact that the the cohorts.
Young Li: Installed Leds in 'twenty, one and prior 22 and 'twenty three.
Young Li: Hum.
In relatively the same and they kind of move in concert and we saw that again in the first quarter, So where the number of LLS per L. D. D went down it went down in all cohorts and they're very tight and their distribution and that continued to be true also as we look across our.
Young Li: Territories in the U S.
Young Li: The change and the effect in March were consistent throughout the U S. The 24 class of.
Ron Kurtz: The 24 class of cohort of LDDs installed, it's probably only relevant to look at those installed in the first and second quarter, and what we did see is that they're not growing quite as quickly as the 23 class did during comparable quarters, particularly in the first quarter. So, it doesn't have an outsized or even a major effect on the number of LALs per LDD because our installed base is so large. It is something that is a pain point, although small in terms of the total number, but we would like to see them be more confident, particularly in this economic environment.
Young Li: Cohort of Leds installed, it's probably only relevant to look at those installed in the first and second quarter and what we did see is that theyre not growing quite as quickly as the 23 class did during comparable quarters, particularly in the first quarter. So it does.
Young Li: Didn't have a outsized or even a major effect on the number of LLS per L. D D. Because our installed base is so large.
Young Li: It is something that.
Young Li: Is a pain point, although small in terms of the total number but we would like to see them be more confident particularly in this economic environment.
Xuyang Li: Okay, got it. Very helpful.
Young Li: Okay got it very helpful.
Xuyang Li: I guess to follow up just regarding, you know, driving innovation and product enhancement. You know, now that we have a better understanding about where Elkong's program's at, you know, Belch and Loam also has announced a program, but they also had to deal with a recall. You know, it seems like, at least on the competitive front, there's a little bit more visibility.
Young Li: I guess the follow up is regarding.
Young Li: Driving innovation and product enhancements.
Young Li: Now that we have a better understanding about where our comp programs that.
Young Li: Bell Bausch and Lomb also has announced a program, but they also had to deal with the recall.
Young Li: It seems like at least on a competitive front there is a little bit more visibility.
Ron Kurtz: Can you maybe talk a little bit more about, you know, the product pipeline? New lenses coming out and what we should expect on that. Yeah, thanks for the question, Xuyang. You know, we would agree with you, and I think we've been pretty consistent that we don't see anything on the horizon that is directly competitive to the LAL. And we also believe that, you know, continued innovation has been an important driver for growing adoption over the past, you know, five years that we've been commercial. These have primarily been incremental enhancements that really allow us to get that next group of doctors and patients to adopt the technology.
Young Li: Can you maybe talk a little bit more about the.
Young Li: The product pipeline or.
Young Li: New lenses coming out and what we should expect on that front.
Young Li: Yes, thanks for the question young.
Speaker Change: We would agree with you and I think we've been pretty consistent that we don't see anything on the horizon.
Young Li: That is directly competitive to the L. A L.
Young Li: And we also believe that.
Young Li: Continued innovation.
Young Li: It has been.
Young Li: <unk> driver for growing adoption over the past five years that we've been commercial these are primarily been incremental enhancements that really allow us to get that next group of doctors and patients to adjust to adopt the technology.
Ron Kurtz: Examples of that have been Active Shield, LAL+, in the fall we introduced low diopter LALs, which are now beginning to be used in the field, and soon we're going to be launching our first foray into the correction of higher order aberrations, and I mentioned that on our last earnings call. So, I would expect, you know, continued such product enhancements to be steadily introduced, and this enables our customers to leverage not only their investment in the capital equipment, but also the investment in their time and that of their employees learning the clinical skills associated with our technology, and then they can then apply that to more and more of their patient populations.
Young Li: Examples of that have been.
Young Li: Active shield L L plus.
Young Li: In the fall, we introduced low diopter L. A LS, which are now beginning to be used in the field and soon we're going to be launching our first four way.
Young Li: For a into the correction of higher order aberrations that I mentioned on our last earnings call. So I would expect that.
Young Li: Continued such product enhancements to be steadily introduced and this enables our customers to leverage not only their investment in the capital equipment, but also the investment in their time and that of their employees are learning the clinical skills associated with our <unk>.
Young Li: Technology.
Young Li: And then they can then apply that to more and more of their patient population.
Young Li: Alright, Thank you very much.
Robert Marcus: Your next question comes from the line of Robert Marcus with J.P. Morgan. Please go ahead. Your line is open. Oh, great. Good morning.
Speaker Change: Your next question comes from the line of Robert Marcus with JP Morgan. Please go ahead. Your line is open.
Robert Marcus: Great Good morning.
Robert Marcus: Um, I wanted to try and Take Ryan's question in a different way. Shelley or Ron, you raised guidance in the second quarter of 24. And then you were in line on third quarter, and you were in line on fourth quarter. And it's the two first in line quarters you had. I believe since being public and, you know, really not, I would imagine how you thought the second half of the year would turn out. And if you look at street models, it was on better LDD placements and missed both quarters LAL utilization. So from our point of view, we started seeing LAL utilization slow down in the back half of the year.
Robert Marcus: I wanted to try and.
Robert Marcus: Take Brian's question a different way.
Kelly: Kelly, Iran.
Robert Marcus: You raised guidance in the second quarter of 2004.
Robert Marcus: And then you were in line on third quarter and you were in line on fourth quarter and that's the two first in line quarter. So you had.
Robert Marcus: I believe since being public and really not.
Robert Marcus: I would imagine how you thought the second half of the year would would turn out.
Robert Marcus: And if you look at Street models. It was on better LTV placements and missed both quarters lay out utilization. So from our point of view, we started seeing L. A L utilization slowdown in the back half of the year.
Robert Marcus: Then when you provided guidance for 2025, you actually guided a pretty good amount above the street. So clearly you were seeing something that we weren't. And even just as late as last week, competitor Alcon had an annals day and they didn't bring up any of the same market concerns that you had.
Robert Marcus: Then when you provided guidance for 2025, you actually guided a pretty good amount above the street.
Speaker Change: So clearly you were seeing something that Warren and even just this.
Speaker Change: Latest last week competitor Alcon had an analyst day and they didn't bring up any of the same market concerns that you had so I guess the question is really.
Robert Marcus: So I guess the question is really now with a lot of hindsight, did this start much earlier than you've acknowledged? And is it? Is it really a market trend, even though we're not necessarily hearing all of those market trends called out by your peers, and we've all known and been publishing on those competitive launches for months now, or is it just a utilization issue specifically to LALs, and how do you discern between the two? Thanks.
Speaker Change: Now with a lot of hindsight.
Speaker Change: Did this start much earlier than you've acknowledged and is it real.
Speaker Change: A market trend, even though we're not necessarily hearing all of those market trends called out by your peers and we've all known and been publishing on those competitive launches for months now or is it just a utilization issue specifically.
Speaker Change: And how do you discern between the two.
Speaker Change: Thanks.
Ron Kurtz: Maybe I'll start Robbie. So, you know, I think the While our LAL procedural growth didn't, you know, meet some of the expectations that were out there, the, you know, LALs per LDD metric continued to be high through the year. And given our growth in installed base, you know, that drove continued growth overall. And so, you know, I think that that and we, in fact, if you look at the overall market and take out LAL growth. The overall market was not growing and was negative. And that was commented at the time, as I recall. and that probably was under because of our growth was probably led us to underappreciate the softening in the market as well as the impact of these you know competitive trialing incentives that others had also mentioned.
Speaker Change: Maybe I'll start Ravi.
So yes I.
Speaker Change: I think the.
Speaker Change: <unk>.
Speaker Change: While R L.
Speaker Change: Oh procedural growth didn't.
Speaker Change: Meet some of the expectations that were out there.
Speaker Change: L.
Speaker Change: <unk> Por L. D D metric continued to be high through the year and given our growth in <unk>.
Speaker Change: Installed base that drove continued growth overall and so.
Speaker Change: I think that.
Speaker Change: And we in fact, if you look at the overall market.
Speaker Change: Take out Lal growth.
Speaker Change: The overall market has was not growing and was negative.
Speaker Change: And that was commented at the time as I recall.
Speaker Change: The.
Speaker Change: And that probably was because of our growth was probably led us to under appreciate the softening in the market as well as the impact of these.
Speaker Change: Competitive trialing incentives that other.
Speaker Change: And it also mentioned.
Shelley Thunen: So I think that led to a, you know, perhaps underestimate of those impacts and again laid a foundation which when coupled with, you know, very significant disruption in consumer sentiment, you know, led to the effects in Q1.
Speaker Change: So I think that led to a.
Speaker Change: Perhaps underestimate of those impacts and again laid a foundation, which when coupled with a.
Speaker Change: Very significant disruption and consumer sentiment.
Speaker Change: Led to the effects in Q1.
Shelley Thunen: Yeah, and to address your comment more specifically about the third and fourth quarters, you are correct. We beat and raised in the first half, both in the first quarter and the second quarter, and raised guidance both times, and then, of course, over-exceeded in the second quarter. We raised guidance for the second half, and we met that increased guidance. but we did not exceed it in the second half. And so I do think that Q3 definitely was affected by more vacations as we discussed. Q4, I think that it was strong, but certainly not as strong as the street expected.
Speaker Change: Yeah and to address your comment more specifically about the third and fourth quarters you are correct.
Speaker Change: We beat and raised in the first half both in the first quarter and the second quarter and raised guidance. Both times and then of course over exceeded in the second quarter, we raised guidance for the second half and.
Speaker Change: We met that increased guidance and.
Speaker Change: But we did not exceed it in the second half until I do think that you know Q3 definitely was.
Speaker Change: Affected by more vacations as we discuss our Q4.
Speaker Change: I think that it was strong but certainly not as strong as the street expected that's consistent with our raised guidance, but we werent able to rise above that and as Ron said.
Ron Kurtz: It was consistent with our race guidance, but we weren't able to rise above that. And as Ron said, I think that we were less aware of market dynamics. And, you know, the rest of the market was shrinking and certainly we recall our competitors talking about that as well, but it was really masked by our own performance. And so I think as we, you know, went through the second half, we didn't recognize the overall market dynamic. and the shrinkage in the second half. And as you know, since 2022 or so, the market has remained roughly at 18 to 19% of total IOL procedures.
Speaker Change: Thank God, we were less aware of market dynamics.
Speaker Change: And the rest of the market was shrinking and certainly we recall our competitor is talking about that as well, but it was really masked by our own performance and so I think as we went through the second half.
Speaker Change: We didn't recognize the overall market dynamics.
Speaker Change: And I and the shrinkage in the second half.
Speaker Change: And as you know you know since 2022 or so the market has remained roughly at 18% 19% of total.
Ron Kurtz: And that really was because of us. So I think that we looked into 2024 with this 2025 with the same confidence that we had in 2024, up until the point that March IOLs did not increase substantially as they typically do in that first quarter.
Speaker Change: I O L procedures and.
Speaker Change: That really was because of us so I think that.
Speaker Change: We looked into 2024 with this in 2025 with the same confidence that we had in 2024 up until the point that <unk>.
Speaker Change: March L. A LS did not increase substantially as they typically do in that first quarter period.
Robert Marcus: Thanks. Maybe a follow-up.
Shelley Thunen: Thanks, maybe a follow up Shelley you.
Shelley Thunen: Shelley, you... You lowered the guide on sales ballpark $30-ish million for 2025 and OPEX about $10 million. There's still a big... Let's just say at current rates, there's really no crossover into free cash flow generation, at least not for a very long time, assuming trends change or hold.
Shelley Thunen: You raised you lowered the guide on sales bar ballpark 30 ish million for 2025.
Shelley Thunen: Opex about $10 million there is still a big.
Shelley Thunen: Hi.
Shelley Thunen: Let's just say at current rates there is really no crossover into free cash flow generation at least not for very long time.
Shelley Thunen: Trends change our hold.
Shelley Thunen: How are you thinking about timelines on cash flow breakeven, your cash needs, and any possibility for a need for a raise? Thanks. Okay, yeah, thank you very much. And I think that that's a astute point you brought up. You know, we're bringing down kind of in the middle of the range, you know, guidance by, you know, 23 million and OPEX down by 10. So in our previous guidance, we were putting more money down to the bottom line, each and every quarter, except the first quarter, typically, which is a heavier cash use quarter, due to, you know, payment of prior year bonuses.
Speaker Change: How are you thinking about timelines on cash flow breakeven in your cash needs and any possibility for.
Shelley Thunen: The need for a raise.
Speaker Change: Oh, Okay, yeah. Thank you very much.
Speaker Change: And I think that that's a distinct point you brought up.
Speaker Change: Bringing down kind of in the middle of the range in our guidance by.
Speaker Change: You know $23 million in Opex down by 10, so in our previous guidance, we were putting on.
Speaker Change: More money down to the bottom line, each and every quarter, except for first quarter, typically which is a heavier cash usage quarter due the payment of prior year bonuses, but in this guidance. We are assuming that we need to put relative to our revenue more.
Shelley Thunen: But in this guidance, we are assuming that we need to put, relative to our revenue, more resources into sales and marketing in particular. I think we need to be, we're very active with our customers, which, you know, we have about 200 people that are customer facing, we'll continue to add to those as we add customers. And so I'm not expecting that we're dropping that gross margin increase to the bottom line in the OPEX guide as well. However, as you know, we have, you know, more than adequate cash to get to cash flow breakeven and profitability.
Speaker Change: Resources into sales and marketing in particular.
Speaker Change: I think we need to be we're very active with our customers, which you know.
Speaker Change: We have about 200 people that are customer facing.
Speaker Change: We will continue to add to those as we add customers and so I'm not expecting that we're dropping that gross margin increase.
Speaker Change: To the bottom line in the Opex guide as well.
Speaker Change: However, as you know we have more than adequate cash to get to cash flow breakeven and profitability, but it does impact the timing of when we may meet our cash flow breakeven as well as GAAP breakeven because of course, we will continue.
Shelley Thunen: But it does impact the timing of when we may meet cash flow breakeven as well as, you know, gap breakeven, because of course, we'll continue to have, you know, investments in inventory and accounts receivable as we grow. And that is deliberate on our part in terms of guidance, we want to make sure that during this period of time, we don't under-resource and we continue to stay close to our customers.
To have investments in inventory and accounts receivable as we grow.
Speaker Change: And that is deliberate on our part in terms of guidance, we want to make sure that during this period of time, we don't under resource.
Ron Kirk: And and we continue to stay close to our customers do you add anything to that Ron.
Ron Kurtz: Do you add anything to that, Ron?
Speaker Change: Yes.
Steve Lichtman: Your next question comes from the line of Steve Lichtman with Oppenheimer. Please go ahead. Your line is open. Thank you. Good morning. Just to follow up on that last point in terms of where the spend is going to be focused, during the PrepareMarks run, you also highlighted strongly supporting acceleration of new customer business models. Can you double-click on that a little bit, talk about what your efforts are going to be there? Because I guess to the extent you can streamline those efforts, that could have an impact on the end customer price and therefore potentially offset some of the macro headwinds.
Speaker Change: Your next question comes from the line of Steve Lichtman with Oppenheimer. Please go ahead. Your line is open.
Speaker Change: Thank you good morning.
Speaker Change: Just to follow up on that last point in terms of where the spend is going to be focused during the prepared remarks, Ryan you also.
Speaker Change: Also highlighted strongly supporting acceleration of new customer business models can you sort of can you double click on that a little bit talk about.
Speaker Change: What your efforts are going to be there.
Speaker Change: Because I guess to the extent you can further streamline those efforts that could have an impact R&D and customer price.
Speaker Change: And therefore.
Speaker Change: To offset some of the macro headwinds so maybe if you could talk a little bit more about what youre doing what youre going to be doing specifically on those.
Ron Kurtz: So maybe you could talk a little bit more about what you're going to be doing specifically on those centralized business models. Yeah, you know, again, these are third party innovators who are seeing the opportunity with the LAL technology to make it potentially more approachable for some ophthalmic practices across the country. And that's been going on, actually, for a number of years. And we've seen several individually successful efforts in this. Our role in that is similarly supportive to what we do with our traditional practice. providing both marketing and training and clinical support not only to the standalone Light Treatment Center but also to the individual doctors who make use of that and providing them with you know both the clinical and marketing materials and education that helps them offer the LAL to more of their patients.
Speaker Change: Those centralized business models.
Speaker Change: Yeah again these are a third party.
Speaker Change: Innovators who are.
Speaker Change: Seeing the opportunity.
With the <unk> technology.
Speaker Change: To make it potentially more approachable for some.
Speaker Change: Elma practices.
Speaker Change: In.
Speaker Change: Across the country.
Speaker Change: And.
Speaker Change: That's been going on actually for a number of years.
Speaker Change: And we've seen.
Speaker Change: Several.
Speaker Change: Individually successful.
Speaker Change: Efforts in this.
Speaker Change: Our role in that is.
Speaker Change: Similarly supportive to what we do with our traditional practices.
Speaker Change: Providing both.
Speaker Change: Marketing and training and clinical support.
Speaker Change: Not only to the <unk>.
Speaker Change: Standalone light treatment center, but also to the individual doctors, who make use of that.
Speaker Change: And.
Speaker Change: Riding them with.
Speaker Change: Both the clinical and marketing.
Speaker Change: Materials and education that helps them offer it offer the el al to more of their patients. So I think it'll be an expansion of those activities very similar.
Steve Lichtman: So I think that it will be an expansion of those activities, very similar, but directed in a slightly different way than what we have traditionally done. I got it.
Speaker Change: But direct it in a slightly different way than what we have traditionally done.
Speaker Change: Okay got it.
Steve Lichtman: Just wondering, on the recent recall announcement from one of your competitors, how are you thinking about that in terms of, you know, potential upside to your revised guidance? Or are you not factoring that in at this point? How are you thinking? I know it's fresh, but how are you thinking about that? Yeah, I would agree with you, Steve, that, you know, there's no you know, no way for us to know what the duration of that would be. I think it's it's largely, you know, not going to be as impactful on us as it would be for some of the other competitors.
Speaker Change: Just wondering.
Speaker Change: The recent recall announcement from one of your competitors how are you thinking about that in terms of.
<unk>.
Speaker Change: Cancel upside to your revised guidance or Youre not factoring that in at this point how are you thinking I know its fresh but how are you thinking about that.
Speaker Change: Yes, I would agree with you Steve that.
Speaker Change: You know Theres no.
Speaker Change: Hi.
Speaker Change: No way for us to know what the duration of that would be I think it's it's largely.
Speaker Change: Not.
Speaker Change: Not going to be as impactful on us as it would be for some of the other competitors.
Speaker Change: But.
Ron Kurtz: But, you know, certainly anything that gives us an opportunity to. Let surgeons and patients see the benefits of the LAL approach to high quality, customized vision. That's an opportunity that we're going.
Speaker Change: Certainly anything that gives us an opportunity.
Speaker Change: Two.
Speaker Change: Let surgeons and patients see the benefits of the L. L approach to high quality.
Speaker Change: Customize vision, that's an opportunity that we're going to take.
Steve Lichtman: Just quickly, obviously not the focus of this call, but you did mention the CE mark. I assume, you know, no revenues built in for this year at this point, but which countries are you going to be focusing on as you sort of build toward that for, I guess, in 2026? So as we've talked about in the past, in Europe, you know, you'll, we'll focus on, you know, the major economies in Europe that already have, you know, strong premium IOL markets, similar to the approach that we've taken in Asia. And so those are going to be, you know, the major markets that everyone's familiar with.
Speaker Change: Just just quickly.
Speaker Change: Obviously, not the focus of this call, but you did mentioned that CE Mark I assume.
Speaker Change: No revenue built in for this year at this point, but but which countries are you going to be focusing on as you sort of build toward that for I guess in 2026.
Speaker Change: So as we've talked about in the past in Europe.
Speaker Change: We will focus on the major economies in Europe that already have <unk>.
Speaker Change: Strong premium I well markets.
Speaker Change: Similar to the approach that we've taken in Asia.
Speaker Change: And so those are going to be.
Speaker Change: The major markets that everyone's familiar with and.
Ron Kurtz: And, you know, we, while we, we don't see, you know, significant revenue in 2025, you know, we will start to grow our presence there. It takes time. And in Europe, you know, it's, it takes, you know, it takes some things, sometimes new product introductions take a little bit more time. So we certainly don't want to, we're not going to be going slow.
Speaker Change: While we don't see.
Speaker Change: Significant revenue in 2025, we will.
Speaker Change: Start to grow our presence there it takes time.
And in Europe.
Speaker Change: It takes.
Speaker Change: It takes some things, sometimes new product introduction to take a little bit more time, so we certainly don't want to.
Speaker Change: Okay.
Speaker Change: Not going to be going slow.
Steve Lichtman: Great, got it. Thanks, Ron.
Speaker Change: Okay got it thanks Ron.
David Saxon: Next question comes from the line of David Saxon with Needham and Company. Please go ahead, your line is open. Yeah, thanks. Good morning, Ron and Shelley. Thanks for taking my questions. So I wanted to maybe first ask on LDD. So on the market, if the premium IOL market volumes are softer, are you assuming in guidance that that translates into softer LDD demand or longer sales cycles? Or kind of how does that market view inform how you think about LDD placements and kind of, you know, customers or prospective customers appetite for the capital purchase? Yes, thank you.
Speaker Change: Next question comes from the line of David Saxon with Needham and company. Please go ahead. Your line is great.
David Saxon: Yes, Thanks, good morning, Ron and thanks for taking my questions. So I wanted to maybe first ask on Ldds. So on the market.
Speaker Change: Premium IOL market volumes are softer are you assuming in guidance that that translates into softer LPG demand are longer sales cycles or kind of how does that market for you inform how you think about <unk> placements will kind of.
David Saxon: Customers and prospective customers appetite for capital purchase.
David Saxon: Yes. Thank you that's a good question.
Shelley Thunen: That's a good question. We did again, you know, say that we would expect more LDD sales in 2025 than we had in 2024. But the overall guidance does assume in our internal numbers that that number is a bit lower. And that would certainly be consistent with our guidance. As Ron had said earlier, you know, practices still are struggling with profitability because of Medicare cuts, other reimbursements across other product lines. And as far as we know, premium IOLs are the only product where they can bill Medicare for the minor amount that they as well as a direct cost to the consumer.
David Saxon: We did again say that we would expect more <unk> sales in 2025, and we had in 2024, but the overall guidance does assume in our internal numbers that that number is a bit lower.
David Saxon: And.
David Saxon: That would certainly be consistent with our guidance as Ron had said earlier.
David Saxon: Practices still or are struggling with profitability because.
David Saxon: Medicare cuts.
David Saxon: Other reimbursement across other product lines and as far as Leno.
David Saxon: Premium I O L. A S R.
David Saxon: Only product, where they can build Medicare for the minor amount that they provide as well as a direct cost to the consumer it's a profitable procedure for them and during these periods of time Lasik drops precipitously that just goes with the economy because that certainly can be put on.
Shelley Thunen: It's a profitable procedure for them. And during these periods of time, LASIK drops precipitously. You know, that just goes with the economy because that certainly can be put off and it's a younger population. The population of roughly 65 plus-year-olds, of course, remain a bit more isolated, but certainly turmoil, and particularly in their assets, such as stocks. can result in some delay or different choices temporarily.
David Saxon: Often it's the younger population.
David Saxon: And the population of roughly 65, plus year olds of course remain a bit more isolated, but certainly turmoil and particularly in their assets such as stocks can result in some delay or defer.
David Saxon: Choices temporarily we do think that this is temporary though.
Shelley Thunen: We do think that this is temporary.
Ron Kurtz: Okay great and then Shelley you mentioned profitability and you know obviously that's a focus for for docs and practices so I guess how are you thinking about pricing at this point you've you've held pricing on the LAL site at least so you know does this change how you think about pricing and then you know in the I forgot if it was in the script or to a question but you talked about how the 2024 class utilization was slower than prior cohorts at least in the first half of 24 so what does that mean in terms of like the cohorts you you've penetrated so far or have you kind of fully penetrated the higher volume group or segment of ophthalmologists and now are we kind of in the you know average to lower volume practices thanks so much Maybe I'll start.
Speaker Change: Okay, Great and then Shelly you mentioned profitability and obviously, that's a focus for docs and practices. So I guess, how are you thinking about pricing at this point.
David Saxon: Held pricing.
David Saxon: On the <unk> side at least so.
David Saxon: Does this change how you think about pricing and then.
David Saxon: I forget if it was in the script or tread question, but you talked about how the 'twenty 'twenty four class utilization was slower than prior cohorts at least in the first half of 'twenty four so what does that mean in terms of like the cohorts you've penetrated so far or have you kind of fully penetrated into higher volume.
David Saxon: Group or <unk> segment.
David Saxon: Ophthalmologists in.
David Saxon: Now are we kind of in the.
David Saxon: Average to lower volume practices. Thanks, so much.
Speaker Change: Maybe I'll start so.
Ron Kurtz: So, with respect to the Last question. You know, I don't think that we've fully penetrated any group. There are a wide variety of practices that have not yet adopted our technology. You know, we have about a thousand LDDs. There are about 2,000 surgeons. There are 10,000 cataract surgeons out there with, you know, at least, you know, several to more thousands of offices where cataract surgery is, cataract surgery patients are seen. So I certainly don't believe that we're anywhere near a saturation point, and even by a class of surgeon. And then the, I'm sorry, the second, the first question was?
David Saxon: With respect to the.
Speaker Change: Last question.
Speaker Change: Yeah, I don't think that we've fully penetrated any group.
Speaker Change: They are.
Speaker Change: A wide variety of practices that.
Speaker Change: Have not yet adopted.
Speaker Change: Technology.
Speaker Change: Have about it.
Speaker Change: Ldds there about 2000.
Speaker Change: Surgeons.
Speaker Change: There are 10000 cataract surgeons out there.
Speaker Change: At least.
Speaker Change: Several to more thousands of practice.
Speaker Change: Private offices, where cataract surgery is cataract surgery patients are seen so I certainly don't believe that we are.
Anywhere near.
Speaker Change: A saturation point and even by Klas a surgeon.
Speaker Change: And then the.
Speaker Change: I'm sorry.
Speaker Change: The first question was.
Ron Kurtz: Yeah, just around pricing. I mean, LALs are kind of the highest. Yeah. So, you know, how are you thinking about that in terms of, like, you know, trying to allow doctors to kind of protect some level of profits while the market volumes are kind of weaker? Thanks so much. Yeah, so in terms of pricing, you know, the cost of the LAL is, you know, a relatively small fraction of the price that doctors charge to their patients. So, you know, we, we believe that the value provided by the technology justifies its cost, which is, you know, somewhat higher than the highest level presbyopia correcting IOLs.
Speaker Change: Just around the pricing.
Speaker Change: Sales are kind of the highest yes, yes. So how are you thinking about that in terms of like.
Speaker Change: Trying to.
Speaker Change: Allow doctors to kind of protect some level of profits while the market volumes are kind of weaker thanks. So much.
Speaker Change: Yeah. So in terms of pricing you know the cost of the L. A O is.
Speaker Change: A relatively small fraction of the price that doctors charge it to their patients so.
Speaker Change: We believe that the value provided by the technology justifies its cost which is.
Speaker Change: Somewhat higher than.
Speaker Change: The <unk>.
Speaker Change: Higher level presbyopia correcting aol's.
Ron Kurtz: And We, you know, we have kept pricing stable since our introduction into the market about five years ago. And part of the ways that we've been able to do that is through efficiencies. And, you know, we fully manufacture all the components of the technology in the U.S., specifically here in you know, we're not going to be significantly impacted by tariffs.
Speaker Change: <unk>.
Speaker Change: We we have kept pricing.
Speaker Change: Stable since our.
Speaker Change: <unk> introduction into the market about five years ago, and part of the ways that we've been able to do that is through efficiencies and we fully manufacturer all the components of the technology in the U S.
Speaker Change: Specifically here in California so.
Speaker Change: We're not going to be.
Speaker Change: Significantly impacted by tariffs.
Ron Kurtz: And, you know, I think that we'll try to maintain a good relationship between the value and the price that we charge to our customers.
Speaker Change: And.
Speaker Change: I think that will try to maintain a good relationship between the value.
Speaker Change: And the price that we charge to our customers.
Danielle Antalffy: Great, thank you.
Speaker Change: Great. Thank you.
Danielle Antalffy: Your last question comes from the line of Danielle Antalffy with UBS. Please go ahead, your line is open. Hey, good morning, guys. Thanks so much for taking the question. My question is really just pretty straightforward, I think. I mean, I guess I am just a little concerned about whether or what gives you confidence that, you know, this hasn't been the last few years, you guys just got the low hanging fruit here. And you've now sort of penetrated what you are going to penetrate of the premium market. So I appreciate all the commentary on the economy, macroeconomic environment affecting the premium market, but more if we're just looking at LAL penetration within the premium market.
Speaker Change: Your last question comes from the line of Daniel <unk> with UBS. Please go ahead. Your line is open hey.
Speaker Change: Good morning, guys. Thanks, so much for taking the question.
Speaker Change: My question is really just.
Speaker Change: Pretty straightforward I think I mean, I guess I am just a little concerned about whether or what gives you confidence that you know this hasn't been the last few years you guys. Just got the low hanging fruit here and you've now sort of penetrated what you are going to penetrate the premium market. So I appreciate all the car.
Terry on the economy macroeconomic environment affecting the premium market, but more if we're just looking at L. A L penetration within the premium market well, maybe you can talk about what gives you confidence that you know that's not what's happening here. Thanks, so much.
Ron Kurtz: Ron, maybe you can talk about what gives you confidence that, you know, that's not what's happening here. Thanks so much. Well, I would say two things give me confidence. One is just my interactions with doctors and practices, you know, throughout the country, and the vast number of practices that not only haven't adopted our technology, but don't know too much about our technology. It's very clear that we're still at a relatively early phase of the market penetration for this technology. And I would just point out that, you know, it would be a really amazing coincidence if we peaked out in the adoption curve exactly when there has been a confluence of macroeconomic and market trends, you know, over a short period of time.
Speaker Change: Well I would say two things give me confidence one is just my interactions with <unk>.
Speaker Change: Doctors and practices.
Speaker Change: Yes.
Speaker Change: Throughout the country and the vast number of practices that not only have an adopted our technology, but no don't know too much about our technology.
Speaker Change: It's very clear that we're still at a relative.
Speaker Change: Relatively early phase of the.
Speaker Change: Market penetration for this technology and I would just point out that.
Speaker Change: It would be.
Speaker Change: Really.
Speaker Change: Amazing coincidence, if we peaked out.
Speaker Change: In the adoption curve exactly when there has been a confluence of macroeconomic and market trends.
Speaker Change: Over a short period of time I, just yeah, I just don't believe in those kinds of coincidences. So.
Ron Kurtz: I just, you know, I just don't believe in those kinds of coincidences. So, you know, I'm confident that these are going to, that, you know, these things will pass and that we'll continue to penetrate the market, which is, you know, the largest opportunity in and certainly in answer segment ophthalmology. Okay, thanks for that.
Speaker Change: I am confident that these are going to that these things will will pass and that will continue to penetrate the market, which as you know.
Speaker Change: The largest opportunity.
Speaker Change: In.
Speaker Change: And certainly in anterior segment of ophthalmology.
Speaker Change: Okay. Thanks for that.
Operator: There are no further questions at this time.
Speaker Change: There are no further questions at this time I would now like to turn the call back over to Ron Kurtz CEO for closing remarks. Please go ahead.
Ron Kurtz: I would now like to turn the call back over to Ron Kurtz, CEO, for closing remarks. Please go ahead. Thank you, Operator, and thank you all again for your interest in Rxsight. We look forward to seeing some of you later this month in Los Angeles at the meeting of the American Society for Cataract and Refractive Surgery, as well as providing further updates at our regularly scheduled first quarter 2025 conference call in early May.
Speaker Change: Thank you operator, and thank you all again for your interest in Rx side, we look forward to seeing some of you later this month in Los Angeles at the meeting of the American Society for cataract and refractive surgery as well as providing for.
Further updates at our regularly scheduled first quarter 2025 conference call in early May.
Goodbye.
Speaker Change: Goodbye.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: [music].